Fireworks

Manufacturing Sets Off Fireworks in June

July 1, 2020
PMI rockets to growth at 52.6% as new orders, production rise at record levels.

Manufacturing strengthened significantly in June, as new orders and production rocketed forward after hitting 10-year lows at the start of the second quarter. The Institute for Supply Management’s monthly PMI index climbed above the 50% threshold for growth in the sector, booming 9.5 percentage points to 52.6%.

The surge was led by double-digit increases in both the new orders and production component of the PMI. New order rebounded 24.6 percentage points to 56.4% and production rose 24.1 percentage points to 57.3% Those growth levels in a single month are almost unprecedented in the PMI’s long history, said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee.

“June signifies manufacturing entering an expected expansion cycle after the disruption caused by the coronavirus (COVID-19) pandemic,” Fiore said in a press release. “Comments from the panel were positive (1.3 positive comments for every one cautious comment), reversing the cautious trend which began in March. The manufacturing sector is reversing the heavy contraction of April, with the PMI increasing month-over-month at a rate not seen since August 1980, with several other indexes also posting gains not seen in modern times.”

Fiore said the committee was optimistic for the first time in months. “As predicted, the growth cycle has returned after three straight months of COVID-19 disruptions,” Fiore said. “Demand, consumption and inputs are reaching parity and are positioned for a demand-driven expansion cycle as we enter the second half of the year.”

Committee members indicated that both output and supply levels were improving, and that despite continued caution, there is reason to expect further strengthening in manufacturing. Among the committee member comments:

  • “While we are seeing signs of an uptick in business activity, it is a slow recovery at this point.” (Chemical Products)
  • “Gradually ramping production back in our plants. Most of our supply base continued to operate during COVID-19, so we are not seeing a significant supply risk. Will be monitoring supply chain financial health closely.” (Transportation Equipment)
  • “Thankfully, we are in quite a few industries, so impact wasn't as harsh on us and more stable. However, during the last two weeks, our bookings have grown, and supply seems to be more readily available.” (Fabricated Metal Products)
  • “Difficulty keeping up with a significant increase in demand related to COVID-19. Industry is up 62.5% vs. (a) year ago. Supply challenges throughout the supply chain. Supply could be hindered if another wave of COVID-19 hits in the fall.” (Food, Beverage & Tobacco Products)
  • “Market demand for refined products has increased as statewide quarantines have been lifted, but it is still below normal volumes.” (Petroleum & Coal Products)
  • “Orders have picked up and are trending toward normal production requirements [volume similar to 2019 production].” (Plastics & Rubber Products)
  • “We are seeing an increase in orders as the economy starts to get rolling again. Slow and steady, sales are increasing. So far, so good.” (Primary Metals)
  • “Looks like May was the bottom in terms of orders. June is stronger, and our order books are rebuilding.” (Machinery)
  • “Demand is down significantly due to COVID-19 but is starting to stabilize. We are hopeful for recovery in the second half of the year.” (Miscellaneous Manufacturing)
  • “The building industry continues to defy expectations, as we continue to rebound stronger from the previous month. Being an essential business across most states and a surge in DIY projects has fueled the industry forward. While the industry will follow the greater economy, we do believe it will be more resilient than most due to potential migration from larger cities and an undersupplied housing market.” (Wood Products)
About the Author

Bob Vavra | Senior Content Director, Power & Motion and Machine Design

Bob Vavra is the Senior Content Director of Power & Motion and its sister publication Machine Design. Vavra has had a long career in publishing, media and events. He has covered all aspects of manufacturing for the past 20 years and is a regular attendee at events such as IMTS and Hannover Messe. Vavra is also a sought-after webcast moderator and event emcee, and has presided over events in the U.S., Germany and China. 

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